Gov. Sean Parnell did not mince words in criticism of the U.S. Environmental Protection Agency for the federal agency's efforts to delay a key permit for the Kensington gold mine in Southeast Alaska.
Parnell offers harsh words to EPA regarding Kensington 081209 BUSINESS 1 Alaska Journal of Commerce Gov. Sean Parnell did not mince words in criticism of the U.S. Environmental Protection Agency for the federal agency's efforts to delay a key permit for the Kensington gold mine in Southeast Alaska.

Photo By Katie Spielberger

Gov. Sean Parnell addresses the Juneau Chamber of Commerce during his first week in office.

Wednesday, August 12, 2009

Story last updated at 8/12/2009 - 1:16 pm

Parnell offers harsh words to EPA regarding Kensington

Gov. Sean Parnell did not mince words in criticism of the U.S. Environmental Protection Agency for the federal agency's efforts to delay a key permit for the Kensington gold mine in Southeast Alaska.

The U.S. Supreme Court cleared the mine permit in June in a lawsuit brought by conservation groups, but the EPA still has authority to veto the permit under a provision of the federal Clean Water Act. The issue may become an early test case of mining policy for Democratic President Barack Obama's administration.

Parnell, a Republican, charged that the federal agency "now seeks to undercut the finality and certainty of a (U.S.) Supreme Court ruling by asking for many months more of environmental analysis and likely delays from challenges and appeals.

"In my view, something is seriously wrong with the federal permitting system if the state can successfully defend a permit in the highest court of the country only to find that a responsibly permitted project such as this cannot get off the ground and provide needed jobs to our citizens," Parnell wrote in a June 30 letter to the U.S. Army Corps of Engineers Alaska District Commander Col. Reinhard Koenig.

The letter was part of the state's comments to the Corps on a revised permit for Kensington mine developer Coeur Alaska Inc. The comment period for the revised period closed Aug. 3, but there is no deadline for when the Corps will make a decision.

The Corps is considering whether to issue a "Section 404" fill permit to Coeur Alaska so the company can complete a mine tailings disposal facility using a small lake near mine, and to put the mine into production.

The EPA requested additional review of the use of Lower Slate Lake in a July 14 letter to the Corps citing new information that has become available, mainly an alternative plan for storage of tailings on land that Coeur itself investigated.

The state's comments to the Corps argue that the alternative "Paste Tailings Facility" plan for on-land disposal developed by the company, as an option in case the lake disposal plan foundered in the courts, is really not new because it is really a variation of a "dry-stack" on-land disposal plan proposed earlier by Coeur and approved after an environmental impact statement was done.

Coeur switched its plan to using Lower Slate Lake several years ago after it was determined that the on-land dry stack facility was too expensive. The company has not released cost estimates for the paste tailings variation.

Conservation groups that challenged the Corps permit approving the lake plan argue that on-land storage of tailings through either the dry stack or paste tailings procedure is environmentally preferable to disposal in the lake because land storage would limit possibilities of any leakage of contaminated fluids from the tailings into the watershed.

State environmental Commissioner Larry Hartig said the state never received notification of a formal application for the paste tailings alternative so there was never any evaluation by state agencies.

The federal Clean Water Act requires the state to find that a modified federal permit is consistent with state laws and regulations, so that evaluation by the state for a paste tailings facility would have to be done, Hartig said.

In its letter, the state argues that the environmental impact of the two on-land disposal plans investigated by Coeur, the dry-stack and later the paste-tailings, are essentially the same, and the Corps does not need to launch a new investigation.

"The Corps is not required to evaluate every conceivable variant of a project plan," the letter said.

The state also argues that wetlands have already been disrupted through Coeur's work to date preparing for the lake disposal project - 20 acres were disturbed until work was stopped by the Ninth Circuit Appeals Court - so any new variation considered would have to consider the additional disturbance.

Further, the agencies' investigation of the Lower Slate Lake disposal "indicate a high degree of confidence that reclamation will support fish in a larger lake after mine closure. Financial assurances remain in place to cover the post-closure contingency placement of approximately four inches on the lake bottom to insure that productive habitat is reestablished," the state argued.

Hartig said the state's major concerns would be to minimize permanent damage of habitat, "and which option has the best opportunity for reclamation." In that light, Lower Slate Lake is superior to either of the two on-land tailings storage plans, dry stack or paste tailings, he said.

In its letter, the state also addressed an issue of acid drainage from rock that was disturbed during work by Coeur that was unrelated to the mine itself. During work on a coffer dam, a small dam built prior to the main impoundment dam, rock was disturbed that did result in some releases of acidic liquids, the state's letter said.

Coeur dealt with this by working with the state Department of Environmental Conservation on a corrective action plan that including treatment of the acidic fluids. The incident did not involve tailings from the mine itself, which are non-acidic. Multiple studies have shown the mine tailings rock does not contain acid, the letter said.

The state concluded its letter saying that if the mine were delayed Southeast Alaska would lose substantial economic benefits.

Kensington would employ about 200 people in its operations with an estimated $15 million in annual payroll. In addition the mine will result in an additional 499 indirect or induced jobs, which would boost the total payroll resulting from the mine to $36 million.

Total new tax revenue to the state and city and borough of Juneau is estimated at $10 million annually, the state said.